The horizon is not so far as we can see, but as far as we can imagine

Mandela’s NeoLiberal Compromise

South Africa may no longer have apartheid, but the majority of the population still lives in poverty, the heights of the economy are controlled largely by whites, and rich blacks are concentrated in the upper ranks of the ANC and their families.  The rape rate is possibly the highest in the world, with a quarter of men admitting to having committed a rape and a quarter of women to having been raped, while murder is rampant.

The ANC had originally intended to purse socialist policies, including taking away the wealth of the richest whites.  Nelson Mandela decided not to do that.  There are varying accounts of why, from outright bribery to being convinced, but let’s go with convinced.  The story is that once Mandela was released from prison, as he traveled the world, it was explained to him that if white flight occurred, his country would mimic Zimbabwe’s fate, and taking away the wealth of the richest whites and distributing it would cause that white flight.

So most of the redistributive part of the ANC’s program was jettisoned.  Blacks were to have political freedom, but whites would control the economy.  (Though you certainly don’t want to be a poor white in S. Africa.)  Tax rates in S. Africa are typical: low for individuals, lower for corporations.

Bear in mind that when Mandela made this decision the prices of commodities, S. Africa’s main exports, were substantially depressed.

Mandela was in a bind, take that advice as ‘warnings’ and you probably read it better: “if you do this, we will disapprove. We cannot allow such redistribution to work, so it won’t.”

Mandela chose to take what was on the table, political freedom absent redistributive justice.

Was it the right decision?

Yes.  Not because it isn’t theoretically possible to do redistribution and make it work, but because at the time it was harder, and because the ANC wasn’t up to the job.  Given how they have botched far simpler policy areas, like HIV, given their rampant corruption, the idea that redistribution could be managed by them in a fair way, while maintaining economic growth and avoiding being crushed by the outside reaction is not credible.  These are not competent people, they are noticeably incompetent.

S. Africa has significant advantages in its mineral wealth (though that can also be a curse).  Resources that the rest of the world must have give you leverage to do what you want, and tell everyone else to take a hike (see Saudi Arabia).  But pulling that off requires finesse and it is harder to do if you have a redistributionist ideology, because international elites are happy to tolerate regressive regimes but do not want fair regimes to succeed, lest they show other countries that inequality and unfair trade deals are not inevitable.

Venezuela, though good has been done, is botching their experiment; so is Argentina.  S. Africa could never have pulled it off.

Much of this is probably also down to Mandela’s age: he was in his late seventies when he was President.  He did not have ten good years left to finesse through this sort of change, he did not have competent heirs or time to create them; instead he had the ANC, whose leaders were corrupt at best.

When the attempt is made at real redistributive justice, as it must be, it will be easiest done if a number of countries do it at about the same time, supporting each other, and acting as a bloc. If key resource nations like Canada, Russia, much of South America and S. Africa were to get together, it would be very difficult to bully them, because they control key resources which cannot be substituted away from except at great cost, and in some cases, at all.

Trade is key in the sense that countries must be able to buy certain key things they can’t make.  If producers work together, in solidarity, they can gain policy independence internally.  But this can only be done as a group, or great costs will be inflicted by the oligarchical forces of the developed world who do not want to, ever, see 90% tax rates create good economies ever again.



Stirling Newberry Could Use Some Books


The 90/10 rule as applied to medical practitioners


  1. eugene

    It always seemed to me that the compromise came *before* Mandela’s release, not after. The National Party was still in a strong position politically and militarily in late 1989, but South Africa was facing severe economic isolation. The big businesses concluded that Apartheid was costing them more money than they were making and so they wanted it over, but were also not willing to let the ANC turn South Africa into a leftist state.

    Mandela and the National Party government had a series of negotiations in the late 1980s. The details have always been sketchy but this was likely the moment where Mandela signaled that an end to Apartheid and true democracy would not necessarily produce economic revolution, that the ANC were willing to preserve the existing economic order if that was the price of freedom. Letting Mandela (and all the other prisoners) free and ending repression was itself enough to produce an ANC takeover and redistribution of wealth if they wanted to do so between 1990 and 1994. That they didn’t shows the path was already there, and Mandela’s experiences after being released just confirmed to him the wisdom of this path.

    South African businesses already had the model of the United States, where apartheid was ended in the 1960s without causing major changes to the distribution of wealth. By 1990 American businesses could safely say to their South African counterparts that giving blacks the right to vote would not necessarily lead to that vote being used to redistribute wealth. Neoliberalism was on the rise and it showed that democracy could be rendered meaningless when it came to running an economy.

    This neoliberal compromise of Mandela’s is already in trouble, as frustration grows in South Africa with continued inequality. The ANC is in serious trouble, corrupt and unwilling to address persistent poverty for fear of undoing the compromise that gave them power. Before Mandela’s passing, COSATU was already looking at forming their own party, perhaps with the SACP, to challenge the ANC from the left. The ANC Youth League is deeply leftist, even after its controversial leftist leader was purged from the party a year or two ago to appease the ANC’s business allies.

    South Africa doesn’t have to figure this out alone, as you rightly note. But they may be well positioned to lead the way out of neoliberalism.

  2. Martin

    I think your main point, that Mandela’s compromise was necessary, is correct. I also like the point that a bloc of countries working together have a better chance of resisting the neoliberal world order. However, your presentation of the ANC as essentially incompetent and of rich blacks as being largely limited to top-level ANC members is really simplistic and insulting to the large number of black South Africans who are now part of the middle class. Since 1994 the country’s GDP almost trebled and although (as elsewhere in the capitalist world) the rich got richer, approximately 10 million black South Africans moved from lower to middle incomes. These are ordinary working people, not members of some sort of inner circle. There are also some aspects of government that have been very competently handled by the ANC, such as a 7-fold increase in social grants and extensive infrastructure development. Finally, South Africa, although still a violent country, is less violent now than before the ANC took over – both in terms of criminal violence (which is down but still far too high) and political violence (which still occurs in the form of police brutality but is much less prevalent now). So I think your good argument is marred by a simplistic and factually incorrect depiction of the current South African situation.

  3. Ian Welsh


    ” Per capita GDP growth has proved mediocre, though improving, growing by 1.6% a year from 1994 to 2009, and by 2.2% over the 2000–09 decade,[22] compared to world growth of 3.1% over the same period.”

    Unemployment rate:

    1980 9.2
    1985 15.5
    1990 18.8
    1995 16.7
    2000 25.6
    2005 26.7
    2010 24.9

    Crime Stats:

    Murder and assault down, rape even, robbery way up.

    And shall we talk about the bungling of HIV?

    Corruption in South Africa:

  4. bcnurseprof

    Zizek agrees with you:

    Boy are you on fire these last couple of weeks, Ian. Brilliant.

  5. BDBlue

    Naomi Klein has an interesting take on the South Africa transition and how they ended up with neoliberal policies in Shock Doctrine (as I’m sure you probably know Ian).

  6. Celsius 233

    December 10, 2013
    Thanks for that link; Zizek is correct, IMO.
    I thinks it’s true to say; almost everything said in the media, both printed and electronic, can rightly be understood in the opposite, for a right view of reality.

  7. Ian Welsh

    I don’t really agree with Zizek, you can do much more redistribution, and put much more of the economy into public hands (or into coops, or collectives) and not wind up with an economy of the whip.

    There are many different types of market relationships, and neoliberalism is only one of them. Nor are market relationships the only fair ones, indeed, market relationships are not fair at all in most cases.

  8. Celsius 233

    If we want to remain faithful to Mandela’s legacy, we should thus forget about celebratory crocodile tears and focus on the unfulfilled promises his leadership gave rise to. We can safely surmise that, on account of his doubtless moral and political greatness, he was at the end of his life also a bitter old man, well aware how his very political triumph and his elevation into a universal hero was the mask of a bitter defeat. His universal glory is also a sign that he really didn’t disturb the global order of power.
    I was especially struck by this closing comment of Zizek’s.
    It certainly rings true, IMO.
    We can mourn what was, should have been, and was not done, but your own statistics show the lie/failure of the vision…

  9. David Kowalski


    You are right about-co-op being one solution. FDR supported consumer co-ops and the stores all lasted at least 50 years. Sun-Kist and Ocean Spray are well-known agricultural co-ops. The government requires that co-ops advertise to promote the growers’ products. The ads have not only are familiar but they pre-date federal involvement by decades. The first Sun-Kist ad dates back to at least 1915 but they may have advertised earlier.

    Sun-Kist was founded in 1893 and by 1905 dominated the California citrus market. I suspect that Richard Nixon’s father, an unsuccessful lemon farmer, may have belonged.

    Ortmann and King wrote that agricultural co-ops would be a good way to re-distribute wealth or at the least improve the economic present and future of farmers in South Africa.

    So, in short, it works well both in the short term and the long term in the United States. It is recommended by academics. Great idea.

  10. Victor Debs

    Ian I think you fall into a bit of a logical fallacy here. You claim that the current incompetence of the ANC is proof that they never had the competence to initiate redistribution in the first place. Here’s the thing, the incompetence of the present ANC doesn’t prove their inability to carry out wealth redistribution. The ANC that’s ruled for some time now is the ANC of the Mandela/Mbeki moderates. These moderates, from the early 80s (when Mandela was moved from Robbin Island), were courted by the apartheid regime in an active attempt to split the movement between moderates, who were amenable to transition without redistribution, and radicals on the frontline who wouldn’t budge.

    While the moderates have certainly made a mess of things, this comes as no surprise. When a ruling party lacks a reason to exist, all that’s left is theft and corruption. When the ANC trod the path of neoliberalism, they lost that reason to exist. If more radical members, like say Chris Hani, had retained greater power, things may be different. Maybe not radically better, but at least more respectable than the current mess.

    How much worse could it have gotten? For all the talk of Mandela taking “what he could get” the fact remains that demography was on his side and eventual victory was pretty well assured. COSATU had the economy by the netherparts at that point and mass action was growing. Militarily too SA was weak, surrounded by black majority states who all eagerly handed their weapons to Spear of the Nation. Finally, the white population too was split, with a sizable minority backing liberation (including armed struggle) and a clear divide between Afrikaners and English which was only getting worse. Apartheid was going to fall and Mandela probably jumped the gun. Can we fault him for this? Not fully. While I thought he failed, I can’t well fault a man for taking the win, even if it wasn’t the best. Politics is an iffy situation and you do what you can. Nevertheless we need to learn from these mistakes.

  11. Ian Welsh


    a fair enough criticism.

  12. “When a ruling party lacks a reason to exist, all that’s left is theft and corruption.”

    As we in the United States today, treating both legacy parties as the single entity they are.

  13. I am suspicious of an author who misstates facts: “Tax rates in S. Africa are typical: low for individuals, lower for corporations.”

    It is very easy to check S. African tax rates by going to the SARS [South African Revenue Service] website. For individuals, the tax rate is 30% above R258,750 [approximately $25,000], 35% above R358,110, [about $35,000], and 40% above R638,600 [about $64,000]. The basic tax rate for businesses is 28%. In addition, there is a 14% Value Added Tax that is levied on virtually all purchases, and 20%+ custom duties on most foreign imports. As a result, cars and most technology imports [computers, cell phones, etc.] are 50 – 75% more expensive here than they are in the States.

    If these rates are considered to be low, I wonder what are the author’s opinion of U.S Tax rates, where the maximum tax rate of 39.6% is not levied until [joint] income exceeds $457,600, and there is no additional VAT, and custom duties are minimal.

    I am an American who has lived in South Africa for the last 10 years, and definitely do not feel as if S. African tax rates are ‘low’ by worldwide standards.

  14. Ian Welsh

    I said they were typical: low for individuals, lower for corporations — that is world standard, and that they are a few percentage points higher than some other countries does not change the fact that by historical standards these are low.

    The great redistributive welfare states were built on FAR higher corporate tax rates, and FAR higher rates on rich individuals.


  15. JohnnyGL

    Ian, first time commenter here, I like a lot of what you’ve got to say. Here are some thoughts:

    “Venezuela, though good has been done, is botching their experiment; so is Argentina.” — I’m not sold on this. I think you’re being unduly pessimistic. Is Argentina doing much worse than Chile or Uruguay? Is Colombia doing better for its people than Venezuela?

    “S. Africa could never have pulled it off.” — It would have been tough, but the world still buys diamonds and gold. Yes, those are not as essential as oil, but Cuba managed to get by with basically no natural resources during that same period (early 90s) after it lost subsidies from the USSR. Certainly, if S. Africa tossed the apartheid regime 10 years earlier, things might have turned out differently. As it happened, the ANC stepped into the driver’s seat right as the Soviet elites decided to bail out on their radical experiment.

    Beyond that, I wonder how much the leadership of the ANC were worried about preventing a massive wave of white flight out of the country. I’m sure there were concerns that if they didn’t play ball with the international financial community, all the skills and capital would decamp for Australia, the UK or (for farmers) neighboring countries. I haven’t seen much comment on how much this factor was considered.

    “When the attempt is made at real redistributive justice, as it must be, it will be easiest done if a number of countries do it at about the same time, supporting each other, and acting as a bloc.” — That’s a valid point and one that I think Hugo Chavez understood more than most. After all, a big part of his legacy is enabling the rise of allies in Boliva (Morales) Ecuador (Correa) and getting on good terms with the Kirchners in Argentina and the Lula’s Workers Party in Brazil. He also brought Cuba back from Cold War isolation.

  16. JohnnyGL

    @Donald Benson,

    You’re comparing S. Africa tax rates to a country with close to the lowest tax rates in the OECD. You’re also taking too narrow a view of the US tax take by leaving out SS, Medicare as well as State and local taxes.

    Also, I lived in Ireland (widely considered to be a fairly low tax country, though mostly because of the corporate rate) and a quick double check of top tax bracket there reveals that it tops out at 41% after 32,800EUR (up a few ticks in recent years). Sounds like the S. African treasury dept. isn’t biting down as hard as they could.

  17. Martin

    You seem really determined to prove that South Africa has not benefited from capitalist strategies, unlike other countries in the East and West. I wonder why that is? Your argument does not depend on showing that South Africa is an economic and social basket case, which factually it isn’t. Like in so many other places that have gone the capitalist route lots of people (not just a small elite) have benefited (although many have not). Mandela made a sensible choice about this (and no he did not have to have the this ‘explained’ to him by patronising Westerners) and the outcome has been much the same as anywhere else. Those who now depict South Africa as an economic disaster zone, uniquely corrupt and given over to criminal violence are playing into a caricature of Africans being unable to run an organised society. I repeat – your argument does not need this kind of simplistic representation of what South Africa is like. I want to believe you that a better society, based on socialist principles, is possible, but being snide and dismissive of what the ANC has in fact achieved is not the place to start.

  18. Ian Welsh

    That’s a misunderstanding of the piece, and you are confused. S. Africa was capitalist before the ANC and it is capitalist now, no change occurred. What I am saying is that the ANC has not managed multiple issues well, at all, and that indicates they are not particularly competent. (Note that I also slag Venezuela, who did engage in redistributive policies, for incompetence). Since the ANC demonstrated incompetence, since moving to redistributive policies is difficult in the current international context, I think that if they had moved to redistributive policies, they would have messed it up.

    That is irregardless of whatever improvements the ANC has overseen, and there are some.

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